CIF warns that underspending in capital budget is undermining economic recovery as industry reports drop-off in public sector project commencements.
The Construction Industry Federation has warned that a drop-off in public sector commencements and chronic capital underspend by Departments could undermine Housing for All and National Development Plan as it presented its budget submission to Ministers McGrath and Donohoe.
“Governments around the world are investing in housing and infrastructure to restart their economies. In Ireland, every €1 billion invested leads to an additional €1.85bn economic uplift and 1,200 jobs with about €600million circulating in the economy in profits and wages. In addition to providing much needed homes, infrastructure underpins the overall competitiveness of the economy whilst connecting our communities. Now is the time to capitalise on historically low interest rates and transform our state through an extensive homebuilding and infrastructure initiative. And yet, companies are reporting a significant slowdown in public sector infrastructure projects. Minister McGrath has highlighted that only 38% of the State’s capital budget is spent by August, following a major underspend in 2020. This demonstrates that the €160billion committed by central Government to infrastructure and increase of €4billion to housing can be undermined by inefficiencies in the system. Planning, public-sector procurement, and complications with utilities all add significant costs and delays in advance of the construction phase of housing and infrastructure. The CIF’s budget submission identifies the key barriers to a more efficient delivery of housing and infrastructure across the Irish system.”
The CIF’s budget submission provides proposals the state and industry should focus on to improve the delivery of construction in Ireland. These are:
- Building the Infrastructure for Ireland 2040
- Housing our Growing Population
- Cultivating People, Skills and Capacity
- Transitioning to a Climate Resilient society & Enhancing Productivity
Key to resolving infrastructure logjams is to ensure that Departments spend their capital budgets. This will ensure an even spread of public and social infrastructure such as schools, hospitals, and roads across all of Ireland’s regions. Currently, delivery is patchy with some Departments more efficiently spending their allocation and this could lead to regional imbalances.
Recent construction input cost increases have rendered several projects financially unviable. Changes to the Government contract and its procurement system are required to ensure that in times of volatility, essential projects continue.
On a related note, the CIF is proposing that the Local Infrastructure Housing Activation Fund be streamlined, to increase the delivery of more infrastructure that enables housing.
Ensuring the industry has sufficient employees across all functions, trade, and roles now and in the future, is critical to the delivery of the Government’s ambition in housing and infrastructure. The CIF estimates that industry will need to recruit approximately 1000 people per month for the coming years to deliver Housing for All and the NDP. As a result, the CIF is calling on the Government to bolster SOLAS’ resources to ensure they can support the industry on recruiting and upskilling employees. The CIF is also calling for the Government to maintain the Apprenticeship Incentivisation Scheme that has enabled SMEs to recruit apprentices again.
On building a climate resilient society, the CIF is also recommending that the Government increase the proportion of the public capital budget devoted to the retrofit of all public buildings and the existing housing stock. In addition, the Government should avail of potential funding sources such as the EIB and ISIF to address climate change priorities such as water infrastructure, wastewater, power generation and the circular economy.